Does not inspire confidence. Sounds more like panic to me.
Also, beward of wild market swings.
Markets have historically swung wildly before huge crashes.
Posted on 01/15/2015 6:00:23 AM PST by SkyPilot
Global markets were thrown into turmoil on Thursday as a shock move by Switzerland to abandon its more than three-year-old cap on the franc sent the currency soaring and Europe's shares and bond yields tumbling.
The franc jumped by almost 30 percent in a chaotic few minutes after the 1.20 per euro cap in place since late 2011 was lifted, surging past parity to trade as high as 0.8052 francs per euro. It was trading at 1.02600 at just after 1200 GMT.
The move reversed an earlier rebound in risk appetite following an overnight recovery in commodity prices.
Over 100 billion francs ($98 billion) was wiped off the value of Swiss stocks, their biggest daily fall in 26 years, while the pan-European FTSEurofirst 300 slumped 2 percent and Wall Street futures turned negative.
As investors scrambled for traditional safe-haven assets, there were new record low yields for Germany's government bonds and gains for the yen and gold.
"This is extremely violent and totally unexpected, the central bank didn't prepare the market for it," said Alexandre Baradez, chief market analyst at IG in France.
"It's sparking panic across all asset classes. It suddenly revives the risk of central bank policy mistakes, right when central bank action is what's keeping equity markets going."
The view among traders was that the Swiss central bank must have felt it could no longer hold out against the tide of money coming its way as the European Central Bank prepares to start quantitative easing and investors pour out of riskier markets such as Russia.
Adding to the nervous mood, oil has also resumed its slide. Brent crude fell back to $47.50 as a rebound by copper and other metals after their big falls on Wednesday also started to wane.
(Excerpt) Read more at foxbusiness.com ...
Just now:
Crude, Gold Jump After Goldman Says SNB Action Hints At “Massive ECB QE”
“This is a massive message from SNB to the market : ECB is going to do QE, and it’s going to be big...” notes Goldman Sachs
Meanwhile, Gold is up, Oil is up...
Note that the Swiss interest rate is -0.75%, down from -0.25%. I guess the zero bound isn’t a bound.
Does not inspire confidence. Sounds more like panic to me.
Also, beward of wild market swings.
Markets have historically swung wildly before huge crashes.
Swiss Stocks Plunge as ‘Crazy’ Central Bank Move Upends Markets
"It’s completely crazy and a shock to everyone,” Francois Savary, chief investment officer of Reyl & Cie., said by phone from Geneva. “Volatility in the currency markets is never very positive, because you add nervousness to a market that is looking for certainties. It makes you unable to forecast profits or economic growth.”
Some big-name investment Guru’s calling this “A Financial 9/11” on Twitter.
A huge QE will trash the Euro, Greece may yet exit/be kicked out of the EU, and Southern Europe is a real basket case.
The Swiss finally said “Enough”, and pulled the plug to protect their own interests.
Not really unexpected. The tie of the franc to the euro was unsustainable. The smart money was shorting euros and buying francs for when this move wold take place.
Ping
Exactly.
This leaves others holding the bag, and they won't like that one bit.
-The Swiss finally said “Enough”, and pulled the plug to protect their own interests.
-Exactly.
This leaves others holding the bag, and they won’t like that one bit.
It also gets the Swiss out of any potential Euro/Greece “Bail-In”, that has already been a rumored last resort.
It must be closer to reality than we know, for such a stark move, just at this time.
Is it correct to say the Swiss decoupled their currency from the Euro to protect the Franc from devaluation due to currency printing the EU is planning?
Ping.
Ping.
Get ready. Get armed
I am financially illiterate, (which Is why I work at a Bank) but I wonder if this has anything to do with Russia Cutting off Gas Supplies in The Ukraine?
I wonder what will happen to all those mortgage and other loans made in Eastern Europe denominated in Swiss francs?
yes
Switzerland seems like the only country in the West that cares what’s best for its people.
Look for Swiss/Euro to stabilise between 1.00 and 1.08 (just my view). Euro is still under pressure, although this explosion and the resultant move has removed a good deal of the pent-up, artificially created pressure. EUR is still a bear and likely will continue to be so until the ECB and Draghi get their respective heads out of their arses. First sign of this (well, I **think** the first, at least) will be when they either let Greece exit or kick them out bodily.
When this occurs? No idea. Should have been done 4-5 years ago in order to prevent the knock-on effects we've all seen with the other quasi-bankrupt PIIGS.
Good trading to you, but STAY AWAY from the ccy mkts unless you are very confident you know what you're about, ok? Instability will reign for some time, and the only trade I can even conceive is the purchase of 90+ day ATM straddles.
The Swiss aren’t stupid.
The Templars have their revenge......................
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